In the long run we'll all be broke

A hearty kick between the legs to America's homeowner class, which, given our culture and tax structure and our state-of-the-art financial instruments accessible by everyone, yet trickled up to a select few, is, well, pretty much all of us.

From the US Bureau of Labor Statistics:

Nobody's fucking working!

Oh, wait. Sorry. That was last week's BLS news. The bit about home ownership here:

The primary argument made in favor of homeownership is that it is the best way for many people to save money: in purchasing a home, people force themselves into making mortgage payments, thereby increasing their share of ownership in the property relative to the bank's share.

However, financial developments over time have decreased the strength of this argument. For example, there are interest-only mortgage contracts, which make it possible for households to pay nothing but interest for a number of years. Even when people have built equity, many of them are able to tap it to pay bills. In addition, housing wealth affects people's marginal propensity to consume: for every dollar of appreciation in house prices, homeowners spend somewhere between 3 cents and 10 cents more than before. 

Homes are often thought of as relatively safe investments that tend to perform very well in the long run, but that this is a myth. From 1975 to 2009, the real rate of return of the national house price index was 1.3 percent; if one assumes a 2.5-percent annual depreciation rate, a 1.5-percent property tax rate, a 7-percent mortgage interest rate, and a 25-percent marginal income tax rate, the real rate of return on a typical home actually drops below zero (to -0.575 percent).

Homeownership can decrease mobility and that mobility is a condition for an efficient labor market. People tend to be especially averse to selling their homes and moving when doing so would incur a loss. In conclusion, the authors state that "homeownership is not for everyone" and that "the case for trying to achieve a nation of homeowners needs to be rethought."